BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 700
                                                                  Page  1

          Date of Hearing:   May 13, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                  AB 700 (Krekorian) - As Amended:  March 26, 2009 

          Policy Committee:                             A.E. S. T. &  
          I..Vote:     5-3
                       Revenue and Taxation                   6-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill diverts about $27 million in revenues from GF  
          programs, such as education, health care, and public safety, to  
          a new local grant program for the arts. Specifically, the bill:

          1)Specifies that about 16% of GF revenues currently derived from  
            sales and use taxes on art-related sales be diverted to a  
            newly created special fund called the Creative Industries and  
            Community Economic Revitalization Fund.

          2)Specifies that revenues received by the fund can, upon annual  
            appropriation of the Legislature, be allocated by the  
            California Arts Council for purposes specified in current law,  
            such as encouraging art awareness, promoting the employment of  
            artists, providing for the exhibition of art works in public  
            buildings, and awarding prizes or direct grants to individuals  
            or organizations.

          3)Requires the Council to submit an annual report to the  
            Legislature that includes the status of each grant made.  
           
          FISCAL EFFECT
           
          GF revenue losses of $12 million in 2009-10 and $27 million  
          thereafter. 
           
          COMMENTS
           
           1)Rationale  . This bill is intended to secure a stable revenue  
            source for grant programs administered by the Arts Council.  








                                                                  AB 700
                                                                  Page  2

            Proponents of the bill (including AFSCME and numerous arts  
            organizations) state that California is in its sixth year of  
            spending just three cents per capita from the General Fund on  
            the arts, and it remains last in the nation for state  
            spending.

           2)Opponents  suggest that, given the major budget cuts already  
            occurring, this is not a good time to be diverting additional  
            GF expenditures away from vital programs to address basic  
            human needs, such as health and social services.  They assert  
            that Legislature should have the discretion to apply this  
            revenue through its annual budgeting process.  They also  
            indicate that if basic needs programs are funded, then the  
            Legislature can and should consider increasing funding for the  
            arts. 

           1)Previous legislation.  During the 2007-08 Legislative Session,  
            both AB 1365 (Karnette) and AB 2728 (Karnette) contained  
            provisions similar to this measure.  Both bills died in this  
            committee. 

           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081